Fourth meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes

Opening Remarks by Angel Gurría, OECD Secretary-General

OECD Conference Centre, 25th October 2011

Ambassador Andreani, Ministers, Ambassadors, Ladies and Gentlemen,

Welcome to the OECD. “Mi casa es su casa” - our house is your house. Although this is the birthplace of the Global Forum it is actually the first time that the Global Forum has met here.

I want to thank Ambassador Andreani for opening this meeting with me, and France for its commitment to the work of the Global Forum, including chairing the Peer Review Group - a key element of your success. I had the pleasure to meet you 2 years ago in my home country, Mexico. Though a hurricane forced us to move from Los Cabos to Mexico City, our Mexican hosts ensured that the Forum remained on course. The Mexican hurricanes have given way to strong tailwinds in Paris as far as tax is concerned. We no longer talk about commitments to change; today, we are making change happen. We are implementing the now universally accepted international standard of transparency and exchange of information.

This work could not come at a better time. Amid a landscape of stalled economies and a crisis of politics where countries are finding it difficult to advance in synch, our collective tax work is a tangible example of countries moving in a mutually beneficial direction that will have positive results for governments trying to extricate themselves from the crisis.

Long standing obstacles to effective exchange of information, such as strict bank secrecy, have been blown away in both OECD and non-OECD jurisdictions. Even more remarkable - we now have a dialogue characterised by trust and openness, and a shared common purpose, where every jurisdiction, regardless of size, has a seat at the table. Next week your report will be sent to the G20 leaders in Cannes. You should be proud of completing almost 60 reports in 18 months - an average of 3 peer review reports per month! The number of reviews completed and agreements signed is laudable. Even more important - you have forever changed the environment in which international financial services activities and tax administrations operate.

Transparency and exchange of information on request are now an accepted requirement for any jurisdiction that wishes to provide financial services in our globalised world. Many of the jurisdictions represented here have had to adapt. Liechtenstein, for example, has made major changes and adopted a “white money” strategy. It has made a commitment that no undeclared money will remain in Liechtenstein. The achieve this, Liechtenstein has implemented new laws to ensure access to information and enter into EOI arrangements for the first time.

There are many other examples of jurisdictions – Belgium, Malaysia, Luxembourg and the Philippines, for example – which have taken domestic action to improve access to information. Of the 59 jurisdictions reviewed to date, 32 have amended their legislation or regulations to bring them into line with the international standards. I appreciate the transition may be difficult for some of you but it is the only way to survive in a world where hiding money for tax purposes is no longer acceptable.

The battle for fairer tax systems is being won on two fronts: jurisdictions are amending their domestic laws. As the OECD forecast, they are gaining from the initiative – centres such as Jersey and the Cayman Islands are prospering. And the expanding network of information exchange agreements is yielding results. Over the past 2 years, the number of requests under these agreements has gone from almost zero to thousands. It is now no longer possible to hide assets or income without risking detection.

Your message is also getting through to financial institutions. Banks are changing their attitude to offshore evasion. Those that counted on bank secrecy to gain a competitive edge are now focusing on the services they provide.

How can we measure our impact? Our recent survey of 20 countries shows that more than 100,000 taxpayers have revealed previously undetected offshore assets. This has yielded almost EUR 14billion in additional tax revenues so far. And that’s just in the past two years. We can expect to see multiples of this 14 billion collected over the years to come.

As cash-strapped governments look to pay down their deficits, this will make a substantial contribution to fiscal consolidation. Just as important - most of the additional revenue has been secured from citizens attempting to evade taxes. At a time when many governments are forced to ask their citizens to accept higher taxes and reduced public services, everyone must pay their fair share.

Our efforts are beginning to bear fruit. We must now ensure that the tree thrives, spreading its branches worldwide. To detect the billions still held offshore, more agreements must be signed, peer pressure must encourage more jurisdictions to implement global standards.

Two years ago we stood together – fully equipped and with a well-mapped route - at the base camp, looking up at the top of the mountain. We’ve been climbing steadily since then - we’re more than half way - and looking forward to the day that all countries sign-on and implement the global standards of transparency and exchange of tax information. Only then can we claim to have achieved our mission.

For that to happened, the Global Forum must continue to monitor and challenge any attempts at back sliding. I know that the Peer Review Group is vigilant and that follow-up procedures exist. This vigilance is crucial to keeping the playing field level. Over the next two days your discussions will fine tune the peer reviews of 13 jurisdictions. But I encourage you to look beyond them.

It is critical that the success you have had during this first phase of reviews is repeated in the next, ensuring that all jurisdictions achieve effective exchange of information not just on paper but in practice. Although 700 agreements is impressive, are these agreements delivering the information tax administrations need to counter all forms of non-compliance - tax fraud, evasion, and avoidance? For effective information exchange, regular discussions between the competent authorities in tax administrations must ensure that requesting administrations don’t have to jump through too many hoops to get information and that responding administrations have access to this information.

This work complements the broader work of the OECD in promoting tax compliance by both individuals and companies around the world. We now have the Multilateral Convention on Mutual Administrative Assistance in Tax Matters which I am confident all G20 countries will join in Cannes. We continue to adapt the OECD Tax Convention to the changing economic, political and business environment; we are looking at how to remove barriers to other forms of exchange of information. And our Forum on Tax Administration – more than 40 countries including all G 20 countries - is examining how tax administrations can leverage the new transparent environment.

Whilst much of the political attention has focused on how we can use these agreements to ensure that the growing number of high net worth individuals pay their fair share of taxes, they can also be used to address better tax compliance by the corporate sector.

Developing countries are crucial to the success of fair and transparent global tax standards. The Global Forum owes much of its strength to your participation. I hope that more of you will join in sharing the experience of building viable tax systems which promote the accountability of governments, deliver the revenue that developing countries need to invest in their futures and reduce growing income and wealth inequalities. We will address these issues head-on at the International Tax Dialogue global conference in Delhi next month. We will also push them in our Tax Force on Tax and Development.

Madame Ambassadrice, I hope that France will give a high profile to this issue in Cannes. Only by developing sustainable tax bases can developing countries move away from aid dependency and toward fair and just societies where governments are accountable to their own to their citizens.

Much work remains to be done. There is growing political interest and support for our collective work. Together with the cooperation and trust that we have built up over the last two years I am confident that you will go on to achieve even greater success. OECD is proud to be associated with this work. I wish you a very successful and productive meeting.